NOTE Issues Second-quarter Interim Report 2024
Expansion of NOTE in Sweden
NOTE has a long-term plan to reach sales of SEK 7.5 billion by 2027. In order to meet the strong growth going forward, NOTE has made the decision to nearly double the factory where NOTE Torsby operates. The property, with the factory of 7,000 square meters and just over 54,000 square meters of land, was acquired at the beginning of 2023 and already then NOTE announced plans for continued expansion of the business. The factory, which was expanded as recently as three years ago, will now be expanded by another 7,000 square meters. “Our long-term plan is firm and we continue to expand for the growth we see ahead. The business in Torsby is in a strong growth phase and it is gratifying to continue to develop our business together with our customers,” says Johannes Lind-Widestam, president and CEO.
Financial performance in April-June
• Sales amounted to SEK 1,012 (1,078) million. Adjusted for acquisitions and currency effects, organic growth was -10%.
• Operating profit was SEK 99 (106) million. Adjusted operating profit was SEK 97 (107) million, adjusted for revaluations of operating assets and liabilities in foreign currencies.
• The operating margin amounted to 9.8% (9.8%). The adjusted operating margin was 9.6% (10.0%), adjusted for currency revaluations.
• Profit after financial items was SEK 86 (96) million.
• Profit after tax amounted to SEK 68 (79) million, corresponding to SEK 2.34 (2.73) per share.
• Adjusted for acquisition-related payments made in the quarter, operating cash flow after investments was SEK 154 (28) million. Total cash flow after investments, including acquisitions, amounted to SEK 137 (-2) million, or SEK 4.73 (-0.07) per share.
Financial performance in January-June
• Sales amounted to SEK 2,067 (2,129) million. Adjusted for acquisitions and currency effects, organic growth was -7%.
• Operating profit was SEK 190 (218) million. Adjusted operating profit was SEK 189 (214) million, adjusted for revaluations of operating assets and liabilities in foreign currencies.
• The operating margin amounted to 9.2% (10.2%). The adjusted operating margin was 9.2% (10.1%), adjusted for currency revaluations.
• Profit after financial items was SEK 164 (200) million.
• Profit after tax amounted to SEK 132 (164) million, corresponding to SEK 4.54 (5.65) per share.
• Adjusted for acquisition-related payments made in the period, operating cash flow after investments was SEK 238 (100) million. Total cash flow after investments, including acquisitions, amounted to SEK 221 (47) million, or SEK 7.63 (1.62) per share.
CEO’s comment –We still see high growth going forward, even if this has been somewhat deferred compared to what our customers have signaled. Our long-term plan is unchanged, and we are continuing to expand for the growth we anticipate.
”The second quarter progressed as the first—we achieved sales of SEK 1,012 million for Q2, which was below our expectations and somewhat below our guidance. Demand is still impacted by a weaker business cycle, which has caused temporary project deferrals by our customers, and inventory adaptations at the customer level. We still anticipate high growth going forward, even if this has been somewhat deferred compared to what our customers expected and have signaled. Our long-term plan is unchanged, and we are continuing to expand for the growth we anticipate.
In the second quarter, we achieved an underlying operating margin of 9.6%. Even if our ambitions for operating margin are higher, we think it’s a sign of strength that we’ve continued to increase our operating margin from recent quarters, and despite us not getting the volumes we planned for. Growth generates profitability, and when the growth our customers have been signaling and placed orders for is deferred, this obviously has an impact since our plants plan staffing and resources based on a different volume. We’re working continuously on rationalising, and still see potential here. Once these volumes increase again, this will also have a positive impact on profitability.
The strong cashflow continued in Q2 and our operating cashflow was SEK 154 million. This was consistent with our plans and due to good profitability and from reducing the excess inventory built up during the electronic component shortage.
We anticipate progressive improvement to the end of the year and expect full-year 2024 sales in the SEK 4.1-4.4 billion interval, with an operating margin in the 9.5-10.5% interval”, says Johannes Lind-Widestam, CEO and President.
NOTEs Interim Report for Q2 2024 is now available in PDF format on the corporate web site, www.note-ems.com, and attached to this message. Today at 10.00 CET, NOTE organizes a teleconference for analysts, media and investors, where CEO and President Johannes Lind-Widestam presents the report. The Interim Report for January-September will be published on 14 October.
